Investors Have Lots of Reasons to be Thankful in 2019
November 25, 2019
By Tom Limoges
Asst. Vice President - Investments
This week, as we gather around the dining room table with family and friends, we have an opportunity to reflect and give thanks for the blessings in our lives. Day-to-day routines often desensitize us to the positives around us. Special holidays this time of year allow us to pause, take a break, and look back to see how far we’ve come since January. Similarly, investors have plenty to reflect on and be thankful for in 2019.
Following a challenging final quarter of 2018, stocks have bounced back this year in a big way. A portfolio comprised of a basket of global stocks returned over 21 percent in 2019, and has averaged nearly nine percent per year over the last decade.
What’s behind the rebound in stock prices? If I were sending holiday cards to those responsible for the favorable market environment, I would start with the Fed for lowering interest rates this year. Lower rates make the stock market more attractive as an investment and have been a major reason for the returns. Additionally, the strong U.S consumer and improving trade relations have boosted the stock market.
While the stock market has received most of the attention this year, the bond market is quietly having a one of its better years too. The average high quality, intermediate term bond fund is up over six percent this year and closer to eight percent if the portfolio has some exposure to high yield or emerging markets. Similar to stocks, the lower interest rate environment has pushed up the value of existing bonds. Our expectation is that while interest rates will remain lower for longer, investors shouldn't expect similar returns in the future. We remain thankful for these less dramatic, solid performing bonds.
The U.S. economy
Near decade-low unemployment and rising wages have put the consumer in a good position. Why is this important? The economic health of the U.S. consumer is closely monitored because overall consumer spending is two-thirds of the U.S. economy. These conditions make it likely that not long after enjoying a delicious Thanksgiving meal, many Americans will set their sights on Black Friday shopping deals.
While uncertainty looms in the markets today, investors have many things to be grateful for this Thanksgiving. We expect that over the near term, the longest bull market in history has the legs to continue, but likely not at the levels seen this year.
However, at Security National Bank, we are most thankful for what matters most — our customers and our employees who serve those customers. Happy Thanksgiving from the Wealth Management team at Security National Bank!